TXO Identifies Potential 3 Tcfe of Gas in San Juan Basin

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TXO Identifies Potential 3 Tcfe of Gas in San Juan Basin

TXO Partners LP said Wednesday it has identified potential natural gas of nearly three trillion cubic feet equivalent in the Mancos Shale of the San Juan Basin in the Southwestern United States. “On an oil equivalent basis, we believe this could represent as much as five times our current total reserve base”, chair and chief […]

TXO Partners LP said Wednesday it has identified potential natural gas of nearly three trillion cubic feet equivalent in the Mancos Shale of the San Juan Basin in the Southwestern United States.

“On an oil equivalent basis, we believe this could represent as much as five times our current total reserve base”, chair and chief executive Bob Simpson said in an online statement.

“The catalyst for action in developing this project is commodity price, and we anticipate strong natural gas economics ahead”.

The Fort Worth, Texas-based company holds production rights in a contiguous area of 58,500 acres in the Mancos field. It also holds water rights and an option for “key” gas gathering systems in the basin, according to TXO.

“We believe the Mancos Shale development will be a game-changer for our reserve holdings and production potential”, added Gary Simpson, president for production and development. “TXO acreage and operations reside in prime position. Offset drilling on adjoining acreage has confirmed well results.

“Given all the important criteria—reservoir characteristics, acreage location, productivity data, and infrastructure access—we have identified a tactical 3,520-acre block as phase I for developing and monetizing reserves, representing about six percent of our current Mancos position.

“Specifically, our internal engineers estimate that this single position holds about 200 to 300 Bcf [billion cubic feet] of natural gas with 25 Bcfe estimated per drill well and has the potential to almost double our existing natural gas reserves.

“Importantly, the company’s acres for exploitation are held by production with no leasehold expiration dates.

“We expect to drill, develop, and monetize at an economically opportune time and pace”.

TXO closed higher at $17.93 on the New York Stock Exchange on Wednesday.

Last year TXO expanded with the acquisition of Williston Basin assets in Montana and North Dakota through separate transactions with Eagle Mountain Energy Partners, a portfolio company of Pearl Energy Investments, and Vendera.

With a total price of $243 million in cash plus 2.5 million common shares of TXO, the acquisitions are expected to add about 4,500 barrels of oil equivalent a day to TXO’s production. The assets are the Elm Coulee field in Montana and the Russian Creek field in North Dakota.

“This acquisition in the Elm Coulee field represents the return to a region where our team previously had success”, Simpson said in a company statement June 25, 2024, announcing the agreements. “We expect the significant oil-in-place targets, with the application of our technology, to create equity value while delivering high returns.”

“These transactions provide the right blend of low-decline rate, high margin and growth potential for TXO”, Brent Clum, president of business operations and chief financial officer, said then.

The transactions were completed August 2024, TXO confirmed in its third-quarter report published November 5, 2024.

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